SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

             |X| Quarterly Report Under Section 13 or 15(d) of the
                        Securities Exchange Act of 1934.
                 For the quarterly period ended: March 31, 2001

                                       OR

             |_| Transition Report Under Section 13 or 15(d) of the
                        Securities Exchange Act of 1934.
                       For the transition period from: to

                       Commission File Number: 000-030813

                                  AlphaRx, Inc.
                 (Name of Small Business Issuer in its Charter)

            Delaware                                      98-0177440
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

                             10-75 East Beaver Creek
                             Ontario L4B 1B8, Canada
                    (Address of principal executive offices)

       Registrant's telephone number, including area code: (905) 762-0745

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:
                         Common Stock, $.0001 par value
                                (Title of Class)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter  period that the registrant was required to file such reports),
and (2) has been subject to such filing  requirements  for the past 90 days. Yes
|X| No |_|

The number of outstanding  shares of  registrant's  Common Stock on May 11, 2001
was 49,388,330.

Transitional Small Business Disclosure Format. Yes |_| No |X|
<PAGE>

                                  ALPHARx, INC.

                                   FORM 10-QSB

                                 March 31, 2001

                                TABLE OF CONTENT

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DESCRIPTION                                                                Page
-------------------------------------------------------------------------------
Part I          Financial Information
-------------------------------------------------------------------------------
Item 1          Financial Statements                                          3
-------------------------------------------------------------------------------
                Unaudited Balance Sheets as of March 31, 2001 and 2000        3
-------------------------------------------------------------------------------
                Unaudited Statements of Operations for the three months       5
                ended March 31, 2001 and 2000
-------------------------------------------------------------------------------
                Unaudited Statements of Operations for the six months         6
                ended March 31, 2001 and 2000
-------------------------------------------------------------------------------
                Unaudited Statements of Cash Flows for the six months         7
                ended March 31, 2001 and 2000
-------------------------------------------------------------------------------
                Notes to the Financial Statements                             8
-------------------------------------------------------------------------------
Item II         Management's Discussion and Analysis of Financial             9
                Condition and Results of Operations
-------------------------------------------------------------------------------
Part II         Other Information                                            12
-------------------------------------------------------------------------------
SIGNATURE PAGE                                                               13
-------------------------------------------------------------------------------


2
<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

                                  ALPHARx, INC.
                          (A Development Stage Company)

                                 BALANCE SHEETS
                          As of March 31, 2001 and 2000

                                   (Unaudited)

                                     ASSETS

                                                           March 31     March 31
                                                             2001         2000
CURRENT ASSETS

   Cash                                                    $  2,905     $  5,395
                                                           --------     --------

     TOTAL CURRENT ASSETS                                     2,905        5,395

PROPERTY, PLANT & EQUIPMENT, at cost

         Less accumulated deprecation of $17,502             65,592
         Less accumulated deprecation of $8,904                           13,848
                                                                        --------

OTHER ASSETS

   Deposit                                                   15,000
   Investment                                                46,408       46,408
                                                           --------     --------
TOTAL ASSETS                                               $129,905     $ 65,651
                                                           ========     ========

See accountant's review report
The accompanying notes are an integral part of this statement


3
<PAGE>

                      LIABILITIES AND SHAREHOLDERS' EQUITY
                          As of March 31, 2001 and 2000

                                                     March 31         March 31
                                                       2001             2000
CURRENT LIABILITIES

   Accounts Payable and Accrued Liabilities         $    28,721     $     8,753
   Notes Payable-Current                                                 25,969
   Accrued Interest                                       3,933
                                                    -----------     -----------
        TOTAL CURRENT LIABILITIES                        32,654          34,722

LONG-TERM LIABILITIES

   Loan Payable                                           4,000
   Loan from Shareholders (note 3)                      164,003
                                                    -----------
       TOTAL LONG-TERM LIABILITIES                      168,003

SHAREHOLDER'S EQUITY

Common Stock, common, $ 0.0001 par value,
   Authorized 100,000,000 shares, issued and
   outstanding 49,388,330 shares                    $     4,939
   Additional paid-in capital                         1,374,291
   Deficit                                           (1,449,982)
                                                    -----------
Common Stock, common, $0.001 par value,
   Authorized 100,000,000 shares, issued and
   outstanding 4,712,833 shares                                     $     4,713
   Additional paid in capital                                         1,148,658
   Deficit                                                           (1,122,442)
                                                                    -----------
TOTAL SHAREHOLDER'S EQUITY                              (70,752)         30,929
                                                    -----------     -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY          $   129,905     $    65,651
                                                    ===========     ===========

See accountant's review report
The accompanying notes are an integral part of this statement


4
<PAGE>

                                  ALPHARx, INC.

                          (A Development Stage Company)

                             STATEMENT OF OPERATIONS
               FOR THE THREE MONTHS ENDED MARCH 31, 2001 and 2000
                                   (Unaudited)

                                                                 March 31
                                                           2001          2000
                                                           ----          ----
SALES                                                    $      0      $      0

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES               31,207        75,096
                                                         --------      --------
         LOSS FROM OPERATION                              (31,207)      (75,096)

OTHER INCOME
   Interest Income                                       $      2      $      0
   Other Income                                                 0             0
                                                         --------      --------
                                                                2             0

         LOSS BEFORE INCOME TAXES                         (31,205)      (75,096)

INCOME TAX                                                      0             0
                                                         --------      --------
                                                                             33
NET LOSS                                                 $(31,205)     $(75,096)

See accountant's review report
The accompanying notes are an integral part of this statement


5
<PAGE>

                                  ALPHARX, INC.

                          (A Development Stage Company)

                            STATEMENTS OF OPERATIONS
                FOR THE SIX MONTHS ENDED MARCH 31, 2001 and 2000
                                   (Unaudited)

                                                               March 31
                                                          2001           2000
                                                          ----           ----
SALES                                                  $       0      $       0

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES             163,341        115,506
                                                       ---------      ---------
         LOSS FROM OPERATION                            (163,341)      (115,506)

OTHER INCOME
   Interest Income                                     $      12      $      10
   Other Income                                                0            903
                                                       ---------      ---------
                                                              12            913

         LOSS BEFORE INCOME TAXES                       (163,329)      (114,593)

INCOME TAX                                                     0              0
                                                       ---------      ---------

NET LOSS                                               $(163,329)     $(114,593)
                                                       ---------      ---------

See accountant's review report
The accompanying notes are an integral part of this statement


6
<PAGE>

                                  ALPHARX, INC.

                          (A Development Stage Company)

                            STATEMENTS OF CASH FLOWS
          FOR THE SIX MONTHS ENDED MARCH 31, 2001 and 2000 (Unaudited)

                                                                March 31
                                                            2001         2000
CASH FLOWS FROM OPERATING ACTIVITIES
   Net Loss                                              $(163,329)   $(114,593)
   Depreciation Amount                                       6,442        2,378

   Adjustments to reconcile note income to net cash
     Cash provided by operating activities:
        Changes in assets and liabilities:
           Increase (Decrease) in Accounts Payable            (118)     (10,273)
           Increase in Deposit                             (15,000)
           Increase in Accrued Interest                      3,933
           Increase in Loan Payable                          4,000
           Increase in Loan from Shareholders              161,638
           Increase in Notes Payable-Current                             25,969
                                                         ---------    ---------
NET CASH PROVIDED/(USED) BY OPERATIONS ACTIVITIES        $  (2,434)   $ (96,519)

CASH FLOWS FROM INVESTING ACTIVITIES
          Increase of Improvements                          (1,837)
          Purchase of Furiture & Fixtures                               (11,656)
          Acquisition of Machinery & Equipment              (6,768)      (1,335)
                                                         ---------    ---------
NET CASH PROVIDED/(USED) BY INVESTING ACTIVITIES         $  (8,605)   $ (12,991)


CASH FLOWS FROM FINANCING ACTIVITIES
       Proceeds from Issuance of Stock                                      485
       Increase in Additional Paid-In Capital                           112,858
                                                         ---------    ---------
NET CASH PROVIDED/(USDED) BY FINANCING ACTIVITIES        $       0    $ 113,343

NET INCREASE (DECREASE) IN CASH                            (11,039)       3,833

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

CASH AS OF September 30, 2000 (1999)                        13,944        1,562
                                                         ---------    ---------

CASH AND CASH EQUIVALENTS AT END OF PERIOD               $   2,905    $   5,395
                                                         =========    =========

SUPPLEMENTARY DISCLOSURE:
The statement of cash flows using indirect method as defined under Statement of
Financial Accounting Standard of No. 95.


7
<PAGE>

                                  ALPHARx, INC.

                                   FORM 10-QSB

                                 MARCH 31, 2001

                          NOTES TO FINANCIAL STATEMENTS

                                   (Unaudited)

1. INTERIM FINANCIAL INFORMATION

     In  the  opinion  of  management,   the  accompanying  unaudited  financial
statements  contain all necessary  adjustments,  which are of a normal recurring
nature,  to present fairly the financial  position of AlphaRx,  Inc. as of March
31, 2001 and 2000, the results of operations for the three months and six months
ended March 31, 2001 and 2000, and the cash flows for the six months ended March
31, 2001 and 2000, in conformity with generally accepted accounting  principles.
Operating results for the three month and six month periods ended March 31, 2001
are not  necessarily  indicative  of the results  that may be  expected  for the
entire year ending September 30, 2001 or future operating periods.

     These unaudited interim financial  statements should be read in conjunction
with the financial  statements and related notes  contained in AlphaRx's  annual
report on Form 10-KSB for the year ended September 30, 2000.

2. FORMATION AND ORGANIZATION OF BUSINESS

     ALPHARX, INC. (the Company) was incorporated under the laws of the State of
Delaware on August 8, 1997. The company is still in its developing stage and had
no active business operation as of March 31, 2001.

3. LOAN FROM SHAREHOLDERS

     At March 31, 2001, the Company's  shareholder has advanced $164,003, to the
Company.  These loans are represented by eleven separate demand notes, and carry
interest  from 0% to 12%,  and are  classified  as  current  liabilities  in the
accompanying financial statements.


8
<PAGE>

ITEM 2: MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION OR PLAN OF
OPERATION

     The following  discussion and analysis  should be read in conjunction  with
the Financial  Statements,  including the Notes thereto,  appearing in this Form
10-QSB.  Except for the historical  information  contained  herein the foregoing
discussion   contains   forward-looking   statements   that  involve  risks  and
uncertainties.  Our actual results could differ  materially from those projected
in the forward-looking statements discussed herein.

General

     We are a development  stage company  engaged in the  development of new and
proprietary drug delivery products. We have developed two types of drug delivery
systems,  the Colloidal Lipid Dispersion  System (the "CLD System") and the Self
Emulsifying  Controlled Release Tablet System (the "SECRET System" and together,
the "BCD Systems"). The CLD System is designed to deliver drugs through the skin
in order to reduce the gastrointestinal irritation that is a side effect of many
orally  administered  drugs,  and the  SECRET  System  is  designed  to  provide
continuous,  controlled  delivery of an incorporated drug. In addition,  the BCD
Systems  are  designed to improve the  bioavailability  of poorly  water-soluble
drugs.

     Since our inception in August 1997, we have devoted  substantially  all our
efforts to research  and  development  conducted  on our own behalf with the BCD
Drug Delivery Systems.  Our primary  activities since inception (August 7, 1997)
have been, in addition to research and development, establishing our offices and
research   facilities,   recruiting   personnel,   filing  patent  applications,
developing a business strategy and raising capital.

     We have experienced  significant operating losses since our inception,  and
expect to incur substantial and continuing losses for the foreseeable future. We
incurred a net loss of  approximately  $31,205 for the three  months ended March
31, 2001,  resulting in an accumulated deficit of approximately  $1,449,982.  To
date, we have received only limited revenue, all of which has been from interest
earned from invested funds.

     We intend to  continue  investing  in the further  development  of our drug
delivery  technologies  and to actively  seek  collaborators  and  licensees  to
accelerate the development and  commercialization of products  incorporating our
BCD Drug  Delivery  Systems.  Depending  upon a variety  of  factors,  including
collaborative arrangements, available personnel and financial resources, we will
conduct  or fund  clinical  trials  on such  products  and  will  undertake  the
associated  regulatory  activities.  We will  need to  make  additional  capital
investments in laboratories  and related  facilities,  including the purchase of
laboratory and pilot scale manufacturing  equipment. As additional personnel are
hired in 2001 and beyond,  expenses can be expected to increase  from their 2000
levels.


9
<PAGE>

RESULTS OF OPERATIONS

     The first six months of fiscal year 2001 ending March 31, 2001  resulted in
a  net  loss  $163,329   from   operations  as  compared  to  $114,593  for  the
corresponding  fiscal 2000 period.  The increase was primarily due to higher R&D
costs  as  a  result  of   spending  on   clinical   development.   General  and
administrative expense are less than in 2000 due to general belt tightening.

FINANCIAL POSITION

     The  Company  went  from a  shareholders'  equity of  $30,929  to a deficit
shareholders'  equity of  $70,752  as a result of losses  for the six  months of
$163,329.

LIQUIDITY AND CAPITAL RESOURCES

     Since inception,  we have financed operations  principally from the sale of
Common  Stock  and  expect  to  continue  this  practice  to  fund  our  ongoing
activities.

     We   currently   do  not  have   sufficient   resources   to  complete  the
commercialization  of any of our proposed  products or to carry out our business
strategy. Therefore, we will likely need to raise substantial additional capital
to fund our  operations  sometime in the future.  We cannot be certain  that any
financing will be available when needed. Any additional equity financings may be
dilutive to our existing  shareholders,  and debt financing,  if available,  may
involve restrictive covenants on our business.

     We expect to continue to spend capital on:

     1. research and development programs;
     2. preclinical studies and clinical trials;
     3. regulatory processes; and
     4.  establishment  of our  own  pilot  scale  manufacturing  and  marketing
capabilities or a search for third party manufacturers and marketing partners to
manufacture and market our products for us.

     The amount of capital we may need will depend on many factors, including :

     1. the progress, timing and scope of our research and development programs;
     2. the progress,  timing and scope of our preclinical  studies and clinical
trials;
     3. the time and cost necessary to obtain regulatory approvals;
     4. the time and cost  necessary  to establish  our own sales and  marketing
capabilities or to seek marketing partners to market our products for us;
     5. the time and cost  necessary  to  respond  to  technological  and market
developments; and
     6. new collaborative,  licensing and other commercial relationships that we
may establish.

         The inability to raise capital would have a material adverse effect on
the Company. We currently have no capital commitments other than the payment of
rent on our facilities lease.


10
<PAGE>

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

     AlphaRx  is  a  development  stage  company.  Certain  of  the  information
contained in this document constitutes "forward-looking  statements",  including
but not limited to those with respect to the future  revenues,  our  development
strategy,  involve  known and unknown  risks,  uncertainties,  and other factors
which may cause our actual results, performance or achievements to be materially
different  from any future  results,  performance or  achievements  expressed or
implied by such forward-looking  statements. Such factors include, among others,
the risks and  uncertainties  associated with a drug delivery  company which has
not  commercialized  our  first  product,  including  a history  of net  losses,
unproven  technology,  lack of manufacturing  experience,  current and potential
competitors with significant technical and marketing resources,  need for future
capital  and  dependence  on  collaborative   partners  and  on  key  personnel.
Additionally,  we are subject to the risks and uncertainties associated with all
drug delivery companies,  including  compliance with government  regulations and
the  possibility  of patent  infringement  litigation,  as well as those factors
disclosed  in our  documents  filed  from  time to time with the  United  States
Securities and Exchange Commission.


11
<PAGE>

PART II: OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

     None.

ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS

     During the three  months  ended March 31,  2001,  AlphaRx has not issued or
     sold any securities  that were not  registered  under the Securities Act of
     1933, as amended.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

     Not applicable.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.

ITEM 5 - OTHER INFORMATION

     None.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

     (a)  EXHIBITS.

          None.

     (b)  REPORTS ON FORM 8-K

          No reports on Form 8-K were filed  during the quarter  ended March 31,
          2001.


12
<PAGE>

                                   SIGNATURES:

     Pursuant to the  requirements of Section 12 of the Securities  Exchange Act
of 1934,  the  registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

DATED: May 11, 2001

                                        ALPHARx, INC.

                                        By: /S/ Michael M. Lee
                                        --------------------------
                                        Michael M.  Lee, President

                                        Directors:

                                        /S/ Michael M. Lee
                                        -------------------------
                                        Michael M.  Lee, Director

                                        /S/ Sai Ming Wong
                                        -------------------------
                                        Sai Ming Wong, Director

                                        /S/ Joseph Schwartz
                                        -------------------------
                                        Joseph Schwartz, Director

                                        /S/ Sandro Persia
                                        -------------------------
                                        Sandro Persia, Director


13